Q1 2021 American Tower Corp Earnings Call
Okay.
Ladies and gentlemen, and thank you for standing by and welcome to the American Tower first quarter 2021 earnings conference call and.
As a reminder, today's conference is being recorded following the prepared remarks, we will open the call for questions. If you'd like to ask a question. Please press 110, I would now like to turn the call over to your host Mr. Cook.
Lawsky Vice President of Investor Relations go ahead, Sir good morning, and thank you for joining American Tower's first quarter 2021 earnings conference call.
We've posted a presentation, which we will refer to throughout our prepared remarks under the Investor Relations tab of our website Www Dot American tower Dot com.
And this morning's call Tom Bartlett, our president and CEO will provide a strategic update on our U S business.
And then Rod Smith, our executive Vice President CFO, and Treasurer will discuss the Q1 2021 results and revised full year outlook.
After these comments, we will open up the call for your questions.
Before we begin I'll remind you that our comments will contain forward looking statements and involve a number of risks and uncertainties examples.
Examples of these statements include our expectations.
<unk> regarding future growth, including our 2021 outlook capital allocation and future operating performance our expectations regarding the impacts of COVID-19.
And our expectations regarding the impacts of the AGR decision and India.
Our expectations regarding our pending <unk> acquisition and any other statements regarding matters that are not historical fact.
You should be aware that certain factors may affect us and the future and could cause actual results to differ materially from those expressed and these forward looking statements.
Such factors include the risk factors set forth in this morning's earnings press release, those set forth and our form 10-K for the year ended December 31 2020.
And and other filings, we make with the SEC.
We urge you to consider these factors and remind you that we undertake no obligation to update the information contained in this call to reflect subsequent events or circumstances and with that let me turn the call over to Tom.
Thanks, Igor good morning, everyone as is typical and our first quarter call. The focus of my comments today will be on our foundational U S business, which represented nearly 58% of our total property revenue and more than two thirds of our consolidated property segment operating profit in Q1.
While accounting for about three quarters of our $60 billion and contractually committed revenues.
The overall NOI yield of our U S property segment now stands at 11, 5% with sites and the portfolio for at least 10 years generating more than 20%. These metrics reflect our long track record and driving strong profitable recurring cash flow growth and the U S and we remain confident and our.
<unk> to extend that track record long into the future.
This confidence is inspired not only by the exceptional visibility we have into our long term organic growth rates through our existing comprehensive master lease agreements, but also due to a number of favorable industry trends and we expect to drive our business forward. These.
These trends and large part center on our customers' <unk> network deployments, which we expect to meaningfully accelerate over the next several years, giving rise to a more developed <unk> world.
On the demand side of the equation mobile data usage growth shows no signs of slowing the average smartphone user and the U S is currently consuming more than 15 gigabits per month and is expected to be using more than 50 gigabit on a monthly basis by 2026, reflecting a CAGR of nearly 30%.
And then.
And proliferation of value added streaming services mobile video conferencing and other content rich bandwidth intensive applications continues distress existing <unk> wireless networks, creating the need for more material additional network capital investments.
And emerging AR and VR applications and other next gen capabilities are contributing virtually nothing to mobile data usage today.
Given the limited coverage and low <unk> device penetration.
Well, we don't think debt will be the case for la and.
And <unk> network Revolution is underway and it's quite possible, perhaps even likely the current growth projections for U S. Mobile data usage will prove to be conservative much like what we've seen in the past.
And the development of <unk> related low latency applications and services additional growth from enterprise accounts, and even fixed wireless applications and the home could all drive usage much higher overtime.
We expect that the increased availability of spectrum and the marketplace, particularly on the mid band side will help enable this usage growth going forward spectrum has always been the lifeblood of the wireless industry and given the capacity necessary to provide users a true <unk> experience is more important today than ever before.
Particularly significant in our view, our mid band spectrum assets like two five gig and and newly acquired C band frequencies a day.
To provide our customers with a crucial middle ground between the attractive propagation characteristics of low band spectrum and the deep capacity characteristics of higher bands. We believe the results and the most recently completed C band auction underscore the importance of this spectrum to our customers as they look to mono.
Ties the benefits of five G.
Importantly, the carrier's emphasized and their public comments after the auction we expect this spectrum to be deployed quickly and wireless.
Industries, and a strong financial position and numerous steps have been taken by the carriers to not only funds the upfront purchase price and the spectrum, but also to effectively deploy it in.
In fact, we are already seeing sizable increases in activity and our own and services segment and consistent with our long term outlook expectations, we expect to see higher levels of gross new business and our property segment. Beginning later this year, particularly in 'twenty two and beyond.
Part of this uptick and activity is in rural areas as stimulus funds from the government support smaller companies to effectively deploy wireless Internet services and as the major operators continue to fill in the white spaces and their networks.
And deployment of fixed wireless for households around the country using mid band spectrum is our customers are planning could also provide further opportunities for us going forward.
All of these factors into account, we believe we have a highly attractive long term monetization opportunity in front of us as the carriers further densify their networks and add more equipment to existing lease sites to support their incremental capacity needs are.
A significant portion of this growth is locked in through our existing contractual relationships. Other components of the growth may be more variable either way, we expect to see higher levels of activity and the marketplace accompanied by increasing wireless capex spend.
On this point analysts are projecting more than $35 billion and average annual capital spending from our customers over the next several years, which would represent industry records.
With that and perspective.
That average annual rate is more than double what the carriers spent back when <unk> was actually deployed.
While each of our customers have slightly different strategies to deploy <unk>. We are confident that day will be successful and doing so.
We also believe that our macro tower oriented U S portfolio of over 43000 sites is optimally positioned to benefit from these accelerating deployments.
Macro sites continue to be by far the most cost effective RF efficient network engineering option and are also optimally located to help deliver coverage and capacity for hundreds of millions of people nationwide.
As a result, we continue to believe that the vast majority of mid band deployments and the U S for the foreseeable future will be on macro towers and.
And our network infrastructure was ideally suited for our customers' needs for <unk> and <unk> and we have no reason to believe that <unk> will be any different.
While we do expect to be unique to <unk> is the added use of massive mimo technology from mid band spectrum deployments on our macro towers, which should provide operators with more dynamic coverage and capacity capabilities.
The race to nationwide five G with the use of massive mimo will require more fiber connections to antennas increase DC power and enough capacity to accommodate the size and weight of these more intelligent RF solutions to.
To prepare for these requirements, we have been proactively investing and more efficient and scalable power solutions and many of our sites. We have also upgraded the capacity of many of our tower structures over the last decade installed energy efficient led lighting on many sites and invested and site hardening initiatives where.
Simply put we stand ready to service our customers as they accelerate their <unk> deployments.
Importantly, macro sites may even be more critical today, given the incremental density networks will require to support a <unk> architecture.
And because only one of our existing tenants is on more than half of our sites today, we have a tremendous opportunity to drive incremental lease up that and capacity utilization as densification initiatives ramp up.
And as has been our experience we would expect the roughly 90 cents of every dollar we generate from this organic leasing activity will flow straight to the bottom line.
As a result, we expect to continue to drive strong operating leverage and the business along with modest capital intensity.
Reflecting two are the hallmarks of our last several decades and growth.
Additionally, we expect to continue to generate strong operating profit margins, including more than 78% and 2021.
All of these factors contribute to our confidence and our ability to drive average annual U S and Canada organic tenant billings growth of at least 5% through 2027 normalized for the sprint churn impacts and at least 6% from 23 to 27, specifically calculated on this.
Aim basis.
Importantly, more than two thirds of this growth is now contractually locked in given the signing of our MLA with dish and the first quarter Mb.
Embedded with these expectations is the assumption that our portfolio of wireless towers will be our fastest growing assets and has been the case over the last five years and there are organic tenant billings growth was an average of roughly 40 basis points higher than our overall U S metric.
This resilient trend and our view is another point of validation is the macro tower will continue to be the focal point of modern wireless networks generating the best economics across the telecommunications real estate universe.
Going forward, we expect these economics to get even better margins will benefit from Densification, driven leasing activity and continued amendments while costs will remain largely fixed and capital intensity should continue to be low.
Existing leases will escalate and historical rates of at least 3%.
And normal course churn should be quite modest likely trending down over time, particularly once we work through the sprint cancellations over the next few years.
We intend to remain laser focused on maximizing our sustainable cash flow growth from these fundamental drivers.
We also believe that the economics of our U S business and specifically of our macro tower sites can be further enhanced through the implementation of selective platform expansion initiatives.
Chief among them is the edge compute which is starting to come and do clear view.
And as true <unk> becomes a reality for consumers and perhaps even more importantly for the enterprise segment.
We expect the key drivers of demand for edge compute solutions to be the emerging need for incremental cloud ran locations and lower latency applications processing and a five day environment is.
And as more and more data processing evolves to the network edge to support those needs, we anticipate that new micro edge data center architecture will be necessary to complement the existing regional framework.
Select locations within our nationwide macro tower asset base, which by definition RF mobile network edge are positioned to play a meaningful role and this evolution.
The underlying thesis supporting this belief is the concept suggest it has been for the last two decades and the deployment of wireless networks share neutral host infrastructure will be the most cost effective and efficient way to rapidly deploy cloud native applications and scale.
And given that our attractively located tower sites and existing access to fiber and power while already hosting multiple communications providers. They are natural candidates to represent hub locations for these low latency wireless edge data centers scale.
Scale deployment of a true mobile edge remains several years away, but and our view the Tam could be quite significant running well into the billions of dollars annually.
In the meantime, we have some half dozen and ongoing small scale distributed compute trials and our tower sites and creating a beachhead to larger scale through mobile edge deployments.
Additionally, our Colo ATL facility continues to outperform our expectations and we are having meaningful conversations with a number of key stakeholders across the datacenter and cloud sectors regarding the optimal requirements for the <unk> edge.
As we've noted previously we intend to explore global joint ventures or partnerships to effectively leverage these inherent opportunities and we continue to work through a number of different scenarios and that front.
The early data points, we are seeing throughout the industry. All suggests that this can be a meaningful scalable opportunity. We can represent solid upside for us in due time and we are devoting resources internally to ensure that we are in a position to be opportunistic and agile.
And the context of the long term outlook, we discussed last quarter, we believe that mobile edge compute could eventually represent meaningful potential upside.
Having said that we are going to remain disciplined from a capital deployment perspective as you would expect.
Recurring revenue strong long term growth prospects healthy ROIC.
And an attractive margin profile are all prerequisites for us to deploy meaningful capital anywhere and that includes our efforts and the platform expansion side are.
Our preliminary assessments indicate that the edge opportunity fits nicely into our framework, but we will need to prove out this thesis going forward.
So taking into account the strong underlying baseline growth path that we have and the us for the next decade, we are in a position to be thoughtful and deliberate and strategic with these types of initiatives.
Additionally, while we are laser focused on driving incremental value and the U S. We expect to have attractive opportunities to deploy capital internationally with high quality scale macro tower portfolios are likely to come to market.
And while my comments today are focused on our U S operation and marketplace. The exact same approach can be duplicated globally.
And whether it's growth platform expansion opportunities or margin expansion and message globally are identical.
With our roughly 220000 sites pro forma for the <unk> acquisition, we have and unmatched presence and some of the fastest growing wireless broadband markets period.
And we can offer to a number of different parties and one stop capability that is second to none.
And while we would expect to expand the depth of this presence over time, so as not to be complacent, we believe that it already gives us a significant competitive advantage.
So as we've always done on a global basis, we will be seeking to maximize long term growth and <unk> per share while maintaining attractive returns on invested capital.
We also continue to invest and our people our systems and processes and remained focused on numerous ESG initiatives, while dedicating ourselves to ensuring a diverse and inclusive culture throughout the company.
To summarize I want to reiterate our excitement about the U S market, we are and a very early stages of a transformative period U S wireless technology.
And that has the potential and fundamentally alter how we live work.
<unk> and play while opening them up tremendous new possibilities across numerous industries.
Our extensive portfolio of communications real estate across the country sits at the cross section of the elements that can make this transformation a reality and as a result, we are positioned to drive compelling long term stockholder returns, while continuing to provide industry, leading service levels to both existing and new.
Customers.
Finally, I want to recognize our nearly 6000 employees around the world who are working tirelessly for all of us achieving the types of results Rod is going to walk you through now, particularly through this horrific pandemic is really remarkable and I want them to know just how much we all appreciate their dedication.
And hard work.
With that let me hand, the call over to Rod to discuss our first quarter results and updated outlook Rod.
Thanks, Tom and thanks, everyone for joining today's call I Hope you and your families are doing well and staying healthy.
And he saw in today's press release, we're off to a strong start in 2021 as <unk> ramps up and the U S and as carriers and our international markets deploy significant capital towards their network enhancement initiatives.
Before getting into the details of our Q1 results and revised outlook I wanted to touch on a few highlights for the quarter.
First we announced the acquisition of <unk>, which we believe will be transformational for our European business. We also signed a master lease agreement with dish, which locks in attractive multi year growth and cash property revenue force beginning in 2022.
Second demand for our towers continues to be strong throughout our global footprint and we saw this reflected in both our solid tenant billings growth and and the high volume of new builds and the quarter.
Third we continue to leverage the capital markets to support our investment grade balance sheet issuing $1 $4 billion and senior unsecured notes and refinancing existing debt and highly attractive rates.
And finally, we made good progress regarding the financing plan for our expanding European business, including private capital, we expect to communicate specific details of our plan prior to closing the first tranche of towers, which we anticipate will be later this quarter.
With that please turn to slide six and I'll review, our property revenue and organic tenant billings growth for the quarter.
As you can see our Q1 consolidated property revenue of 2 billion and $130 million grew by seven 9% or nearly 10% on and FX neutral basis over the prior year period.
This included U S property revenue growth of 13% and international property revenue growth of one 7% or five 8%, excluding the impacts of currency fluctuations. These.
These growth rates were right in line with our expectations and continued to reflect the essential nature of mobile services and the importance of our tower portfolio throughout our served markets.
Moving to the right side of the slide organic growth was once again, a significant contributor to our overall revenue growth.
On a consolidated basis organic tenant billings growth was four 1%, including three 6% and our U S and Canada segment, and 5% and our international markets in the U S. We had a solid quarter of growth new business Commencements as expected and churn was right and the middle of our historical 1% to 2% range.
<unk> escalators were two 6% impacted by certain timing mechanics within our MLA with T mobile for the full year, we expect escalators to come in right around 3% consistent with historical trends.
Meanwhile, International organic tenant billings growth was particularly strong in Latin America coming in at seven 9% and was also quite solid and Africa, where we generated growth of seven 4% in both regions. We are continuing to see our tenants actively deploying equipment across their network as mobile data consumption.
Rose rapidly acting.
Activity and Nigeria was a highlight once again and we continue to expect growth and that market to ramp up going forward.
We also had a strong quarter in Europe, particularly in Germany, where gross new leasing growth was around 7% driven by accelerating <unk> deployments and continuing investments and <unk>.
And India, we saw and organic tenant billings growth decline of one 6% in line with our expectations as we continue to work through the latter stages of AGR and consolidated related churn and the market.
On the gross new business side, we saw another solid quarter.
Which was further complemented by contributions from the more than 5000 sites, we have constructed and the market since the beginning of 2020, notably global commenced monthly new business in the quarter, including contributions from new builds was more than $11 million up about 17% versus the prior year period and representing.
And a new ATC record level.
Turning to slide seven and our first quarter adjusted EBITDA grew 13, 3% or 14, 9% on and FX neutral basis to 1 billion and $440 million and.
Adjusted EBITDA margin was 66, 7% up nearly three full percentage points over the prior year driven by continued organic growth and prudent cost controls throughout the business as well as the benefits of straight line revenue related to the T. Mobile MLA signed late last year cash SG&A as a percent of total property revenue was $6.
6% for the quarter as significant scale across our footprint continued to yield benefits along with some bad debt reversals and India.
Moving to the right side of the slide consolidated <unk> and consolidated <unk> per share each grew by about 24%.
These growth rates included the benefit of the non recurrence of about $63 million and onetime cash interest expense booked in Q1 of last year associated with our purchase of Mtn's minority Stakes, and our Ghana and Uganda businesses.
Normalizing for that item growth would have been around 16% the highest rate and several years. This was driven by high conversion of cash adjusted EBITDA as well as lower than expected cash interest nonrecurring cash tax refunds and seasonally low maintenance capex.
I will note that the cash tax and maintenance Capex trends. We saw this quarter are largely attributable to timing. So these lines are expected to pick back up over the rest of the year. As a result, we expect that Q1 will be the highest level of quarterly consolidated <unk> per share that we see in 2021.
Finally on and FX neutral basis, consolidated <unk> and consolidated <unk> per share growth for the quarter would have been right around 26%.
Let's now turn to our revised full year outlook, where I'll start by reviewing a few of the key high level drivers.
First due to the negative impacts of translational FX fluctuations and some of our international markets, we are reducing our property revenue outlook by $25 million at the midpoint.
On an FX neutral basis, we would be increasing our property revenue expectations due to higher pass through and straight line revenue internationally.
Second despite these FX headwinds, we are raising our outlook for both adjusted EBITDA and consolidated <unk>. The adjusted EBITDA outperformance is primarily attributable to higher expected contributions from our services segment driven by pre construction site acquisition zoning and permitting work for our.
<unk> as well as slightly more favorable SG&A trends and the business.
Regarding our improved <unk> expectations. In addition to the services outperformance.
We are anticipating lower cash taxes and cash interest expense for the year.
And finally per our historical practice, our revised outlook continues to exclude the impact of our pending <unk> transaction and its associated financing, we expect the transaction to close and multiple tranches beginning with the majority of the European sites later in the second quarter and with some of the German roof tops and the Latin America sites and Q3.
Free.
Once the assets begin to close we will update further iterations of our guidance to include these contributions we look forward to quickly integrating the portfolio and as previously noted expect the deal to be immediately accretive to consolidated <unk> per share.
With that let's turn into the details of our revised full year expectations.
As you can see on slide eight we are now projecting consolidated year over year property revenue growth of seven 5% at the midpoint.
The decline as compared to the prior guidance is due to approximately $48 million and negative translational FX impacts, which is being partially offset by about $23 million and additional international pasture with straight line revenue.
Moving to slide nine you will see that we are reiterating our organic tenant billings growth projections across all regions as the global leasing environment remains consistent with our prior expectations across our footprint.
We continue to expect consolidated organic tenant billings growth of 3% to 4% and 2021.
In the U S. As Tom outlined earlier, we anticipate a prolonged period of strong growth driven by <unk> related densification initiatives by the carriers as they rollout multiple spectrum bands.
We continue to expect that gross new business activity will accelerate through the year and into 2022.
Looking to Latin America organic tenant billings growth is expected to be roughly 7% for the year. Despite some challenges around COVID-19 trends and the region cash.
Are your activity remains consistent as customers continue to increase their mobile data usage and carriers respond with incremental network investments.
And Africa, we expect to generate organic tenant billings growth in excess of 8% driven primarily by spending on <unk> deployments.
We are seeing especially strong growth in Nigeria, where new business trends continue to inflect positively and where our contract structures with key tenants are supporting growth.
As we move into the back of the year, we anticipate that Africa organic tenant billings growth will accelerate to above 9%.
And Europe, we continue to expect organic tenant billings growth of over 3% for the full year and are seeing solid trends, particularly on the gross new business side, we're especially encouraged by what we're seeing and Germany, where organic tenant billings growth, excluding churn hit 7% and Q1 for the first time.
We expect positive new business trends to continue going forward as incumbent carriers accelerate their <unk> initiatives and as a new tenant begins to roll out its network.
Finally, and India, we continue to expect roughly flat organic tenant billings for the year, while we believe were and the very late stages of the consolidation process. We maintain our expectation that we will see elevated churn this year as the post AGR environment sorts itself out.
With that said, we remain optimistic that the long term growth trajectory and the market should be more favorable, particularly given that the structural framework of the wireless sector. Today is probably the most constructive it has been in the last decade.
Moving to slide 10, we are raising our adjusted EBITDA outlook and now expect year over year growth of nine 6%, despite about $30 million and negative translational FX impacts as compared to our prior outlook.
Around $33 million and incrementally expected services gross margin $3 million or so in net straight line favorability and about $4 million and lower cash SG&A is enabling us to more than offset the FX headwinds.
The services activity, we are seeing is broad based and spread across multiple tenants and and our view another indication that U S network investment activity is and the early stages of a sustainable acceleration.
Turning to slide 11, and we're also raising our expectations for full year consolidated <unk> and now expect year over year growth of over 9%.
With an implied outlook midpoint of $9 25 per share.
Services segment outperformance as well as about $13 million and net cash interest and cash tax favorability are driving this upside and enabling us to absorb about $25 million and unfavorable FX impacts on a per share basis, we expect growth of 9% for the year and continue to drive towards <unk>.
Our goal of delivering double digit growth.
Moving on to slide 12.
Let's review our capital deployment expectations for 2021, which are broadly consistent with our prior outlook and reflect our continuing focus on driving strong sustainable growth and consolidated <unk> per share.
Distributing capital to our common shareholders remains our top capital allocation priority and we continue to expect to allocate approximately $2 $3 billion towards our dividend in 2021, and applying a year over year growth rate of around 15% subject to our board's approval.
Regarding capex, we are raising our projections by $25 million at the midpoint due to some additional expected U S land investments and a modest increase and startup capex internationally.
On the acquisition front, we spent around $115 million and the first quarter and continue to expect to deploy over $9 billion for the <unk> transaction later this year.
As I mentioned earlier, we have made substantial progress on the financing plan for our European business and our acquisition of the <unk> assets. This includes on the private capital front, where we continue to remain confident that we can bring and one or more high quality strategic counterparties to purchase minority Stakes and our European business not only.
And to help us finance, the <unk> transaction, but also to collaborate on future European expansion opportunities.
On the debt side of the equation, we continue to expect to take our net leverage up to the high five times range, having completed a U S. Dollar denominated senior unsecured notes offering in Q1, we anticipate that other near term debt issuances are likely to be euro denominated.
This is consistent with our expected material expansion of Euro based revenues and our business and will enable us to take advantage of highly attractive financing rates.
Finally, any remaining funding needs that isn't covered by debt issuances or private capital will be in the form of equity through a common equity issuance <unk> and mandatory convertible preferred issuance and our goal continues to be to fund this transaction and a way that is not only optimal from a capital structure perspective, but also enables us to opt.
And my shareholder returns.
Turning to slide 13, I'd like to spend a few minutes and our Newbuild program, which has accelerated over the last few years to meet increasing demand for new sites by a number of our key international tenants.
As you can see since 2016 and including our expectations for this year, we will have added over 23000 sites to our portfolio through new construction and.
In 2020, we built over 5800 towers, a new American Tower Records and we're off to a great start in 2021, adding nearly 2000 sites and our international markets for the quarter a level of activity only exceeded by that of Q4 of 2020.
Moving to and the middle of the slide you can see that we are seeing highly attractive returns on capital deployed towards new sites in Q1 average day, one newbuild NOI yields were around 12%.
And our APAC region, where we added over 300 sites, we saw highly attractive yields of around 15% and in Africa, where we added more than 500 sites. We average day, one returns of over 10%.
We're anticipating another record year of new builds in 2021 with 6005 hundred sites at the midpoint of our outlook.
The majority of these deployments will be focused across these same APAC and Africa regions, where we expect to drive the most attractive newbuild returns and where the vast majority of Newbuild activity is for investment grade anchor tenants.
Looking beyond 2021, we expect this trend of increasing demand for incremental wireless infrastructure to continue as carriers and markets with fast growing populations and surging demand for mobile data work to enhance their networks.
We believe that our existing global scale track record of providing best in class service levels and strong relationships with <unk> place American tower, and a favorable position to act as a preferred partner for these large scale deployments and as such we will look to take advantage of the opportunity to continue growing our international.
<unk> portfolio by deploying capital for high return Newbuild projects and as Tom noted on last quarter's call based on the demand we're seeing for new sites internationally. We are targeting the construction of 40 to 50000 new sites over the next five years.
Finally on slide 14, and in summary, Q1 was another quarter of solid organic growth margin expansion dividend growth and strong newbuild activity, we were able to secure a transformational deal in Europe with the pending <unk> transaction.
And a value additive long term MLA and the U S continued to enhance our balance sheet through opportunistic refinancings and remain focused on cost controls and driving sustainable recurring growth. We are excited about the global demand for tower space and look forward to making additional progress on many fronts through the rest of the year as we seek to.
Liver compelling total returns to our shareholders with that I'd like to turn the call back over to the operator for Q&A.
Thank you, ladies and gentlemen, if you'd like to ask a question. Please press one and then zero on your telephone keypad and you may withdraw your question at any price by repeating one zero command if youre using a speakerphone. Please pick up the handset before pressing the numbers once again, if you ever question.
And then zero at this time and one moment. Please for your first question.
Yes.
Your first question comes from the line of Simon Flannery from Morgan Stanley. Please go ahead.
Thank you very much good morning, Tom Thanks for the view on how are you. Thanks for your overview on the U S portfolio very helpful. It does seem like you are also becoming more constructive on Europe, we have seen the telsey of transaction and to Rob's comments about looking for partners. It seems like that extends beyond this.
So perhaps you just give us a little bit more color on what you see in Europe now it seems like Germany in particular is very strong but that's it.
Are you open to becoming an even bigger part of your future beyond the telsey of steel and and what are you exactly are you looking for and these partnerships as opposed to raising straight equity or debt given.
Capital markets there.
And no. Thanks, Simon Thanks for the question and we've been looking at the European market for a better part of a dozen years.
And we did.
Create a couple of beach.
I had properties, if you will and France, and Germany pretty small and kind of the four to 5000 sites a number of years ago and have continued to to look in those particular markets to see if there are opportunities one of the challenges that we always saw and those markets were.
Who the counterparty was what the capital would be.
And required.
To upgrade the sites themselves and really what were the long term growth.
And projections and opportunities and in the marketplace and so and as such we were never successful in terms of kind of landing any particular transactions up until the transaction that we're just about ready to close with Telsey. It and a lot of that is a function of the relationships I think that we built with telefonica over so many years.
And I have and have they have such credibility and I think we have a lot of credibility with them and so we were able to put our hands on this particular portfolio and I think in particular for those very reasons that I mentioned before that got in the way of us being able to close things.
Is that the portfolio itself is very solid its a terrific set of assets typically located.
And as I said, good good counterparty and now what we're starting to see and the marketplace as Rod talked about was really the evolution of five G. We're starting to see more spectrum being deployed to support <unk> and we're really I think just on the front and.
And what that <unk> deployment is going to look like we see it accelerating particularly in markets like Germany.
And we see the opportunity for a new entrant, who is going to be coming into the marketplace and so we think it really rounds out our overall portfolio I think we have a significant competitive advantage and that we have a presence and so many different.
Very very important markets around the globe and this just increases the overall presence, we have and and what was kind of a hole if you will and our portfolio given the size of the assets that we had before and so now we're going to have 30000 sites and.
And the marketplace terrific counterparty and as I said right and the beginning parts of what we think is going to be a long term growth trajectory and the region and so we'll use that as a as a way to be able to continue to grow if it makes sense and if we find good assets good opportunities in.
In the region I think we're positioning ourselves with some very interesting private capital and so that will increase the overall platform for our ability to grow and the.
And the market I mean, theyre very passive we're operating it and I mean, there are minority partners as you would expect.
But theyre very interested also and growing their portfolios and <unk>.
Our base of assets.
And hopefully there'll be able to participate and future potential investments with us. So I think that this is all coming together quite nicely for us.
And we've received the approvals to be able to move forward with the transaction and and all due respect and so we're excited about what the region has in front of us and as I said equally as important we're excited now about what that brings to our overall global footprint and how important that could be too.
<unk> Hyperscale.
Who knows who might be looking for kind of a one stop shop, if you will and looking at our over 200000 sites and these key markets.
And and and we look to continue to grow that Rob talked about the 40% to 50000, new builds that we're looking at.
And so we very much of our sites and increasing our footprint globally and I think this is a great step.
Great very helpful. Thank you.
You bet.
Your next.
Comes from the line of Ric Prentiss from Raymond James. Please go ahead.
Hey, good morning, guys.
Eric.
We will follow on Simon's question, a little bit there.
And if so.
Private capital and makes sense and Europe does it makes sense and other areas outside of Europe to come on board with you guys.
It very well May Rick.
We've had our JV partners.
And the form of MB.
Msos in the past as you well know with MTN and we're a great partner.
And it very well may.
Look at it on a case by case basis.
And look at the opportunities we think we have a good playbook.
If you will and that we've created as a result of the work that we've done.
On this particular transaction and Theres definitely a lot of interest and so we'll look at that as a perhaps it means to create a broader platform for our ability to grow so.
It's very very possible and as you know, we'll look at everything on an individual basis case by case basis.
It makes sense and you also pointed to obviously, some excitement and about a new entrant and Germany assume that's the drillers folks what can you tell us about their aspirations are what type of network their thinking and building.
Yeah, I think that's probably a better question for them and.
In terms of what they're actually looking for are they recently you do have executed a.
A roaming agreement with Telefonica. So they have a very strong relationship I think with with tap and the market, which will then be.
Be able to hopefully take advantage of.
And so I think that will unfold over the year and they've said publicly in terms of putting that altogether.
They are looking to rollout <unk> urban markets first and so this is where our rooftop.
<unk> and rooftop assets and that market as we've talked about is just and so incredibly valuable and that's a particular asset base that we just didn't have before we were quite a rural in terms of the portfolio. We had before so this really takes it up a few notches in terms of our ability to be successful and the marketplace and and my sense.
As a.
And they will take advantage of the rooftop assets.
Probably out of the gate.
Okay and then.
Thinking of MLA as we're getting a lot of questions with Verizon and having signed MLA with Crown and S. Back you guys have the Verizon portfolio of towers from a transaction a few years ago talk to us a little bit about what the ask given the take is kind of on and MLA with Verizon and with you guys well, yes, I mean as you know Rick we already have a long.
Term master lease agreement in place with horizon and so it.
It wasn't one where it needed to be extended or from that perspective.
We have a terrific relationship with.
And with Horizon.
We're in conversations with them and conversations with them on quite a regular basis not just on this spend and a lot of broader issues and.
And the marketplace and so we have a a holistic.
Right.
That we have right now with them that expires at the end of the year and that's just one element of this broader long term.
Master lease agreement with them and whether that continues or not who knows.
But.
I think providing excellent service for Verizon and they're being very aggressive.
And on rolled out of <unk>.
<unk> and C band and we'll be there every step of the way for them.
Okay and last one from me it looks like you've removed the word aspirational from just having your target on <unk> per share by double digit does that mean.
Obviously, it's a goal, but its not quote and I think aspirational kind of scared some people last time around.
Well it is a goal I mean, I don't know if its aspiration or whatever.
Never.
You want but.
My compensation is driven on <unk> per share growth and return on invested capital.
And our shareholders, we require that too so.
And we very much have an objective of that double digit now, it's not going to happen maybe and every year.
Oh it is.
It's long term.
But we've been able to be very successful in terms of driving that kind of performance over the last 10 years.
And and we're very focused on continually.
And driving.
So that kind of performance and going forward 2022, we do have the the the.
Churn impacts associated with them.
And we're just sprint assets.
So could that be a challenge, perhaps but but our goal is still the same and so I think we have a number of levers.
We're going to be bringing on the <unk>.
Assets, which I think will be very happy with those results and and.
And what that kind of accretion should be taking advantage of the markets.
And and we will have our normal solid growth that we see going on in the business and so we just increased our overall EBIT performance for 2021 and.
And so we will remain laser focused on our on all of our costs.
And including all of our capital being spent again our goal is to drive that kind of performance.
Makes sense, thanks, Tom everybody stay well.
You too.
Your next question comes from the line of John Atkin from RBC. Please go ahead.
Thanks.
Wanted to ask about <unk> and you talked about strategic Counterparties at a at a high level can you talk a little bit about.
The types of things.
That are factoring in here.
With respect to governance valuation or just kind of other factors.
Debt or kind of play a role and and and and how that shakes out and then.
It's been a couple of conference calls since you mentioned fiber and it.
Just wondered if there's kind of an update there or is that less of a focus these days and some of your.
Latin American properties.
Maybe I'll ask rod to address the first question and I'll take the second one and John.
Sure Tom that sounds great. Thanks, Jonathan for the question Hope Youre doing hope you're doing well so from a high level in terms of our <unk> financing. Our plan has not changed and we continue to make very good progress on the path that we that we originally and now when we announced that we were entering into the transaction itself. So there's a few broad.
Principles that we're looking for one is we expect to finance this deal and a way that is consistent with our investment grade credit that still is the.
Focus our aim is to minimize the dilution of our current common stockholders. So continue.
Continue to be focused on that as well and and we expect to finance this transaction and a way that supports us being immediately accretive which is what we said early on and Thats continuing to be our focus and and our expectation here as we move forward.
So a couple of things in terms of the the internal workings and the financing plan and I don't want to get into the details around the governance and and.
And valuation and those sorts of things and one thing I would say valuation wise, it's very consistent with kind of the valuation of what we're doing with Celsius.
In terms of the minority Stakes that we are selling we're selling minority stakes potentially in our European business not just the <unk>. So we will be putting our legacy businesses.
Finding out what's its healthiest assets. So one key point is we do expect our debt to come up to the high five times, we've said that before we're still very comfortable in that range and we do believe that that is consistent with our investment grade credit rating and have had many discussions with the credit agencies and we do not expect any risk of downgrades or outlook changes.
There anything from that perspective additional near term senior notes that we may issue in order to fund the <unk> transaction are likely to be denominated in euro.
And euro currency and that will allow us to take advantage of the very attractive rates that we see and the euro market certainly.
And then on the private capital front, and as Tom alluded to and I mentioned and my comments, we continue to progress along that path and we're very confident that we can bring and one or more.
Very strategic Investor. So, we certainly are talking to the world's premier investors and certainly folks that understand the space and understand the European market and other markets quite frankly, as well as have relationships with some of our biggest customers around the globe. So there may be more than just financial benefit here to our.
Shareholders, but also strategic and channel broader partnerships benefits as.
As well so certainly that that's a.
That's a key focus and then the final piece of the financing plan will come in the form of equity. So whatever is not funded through the increase net leverage debt that I talked about and through the euro debt offerings and private capital, we expect to go into that into the market and issue and issue some.
Some equity in terms of timing, we do expect the transaction to begin to close and the second quarter here, probably as early as late May and for some other European markets. The Latin American markets were originally expecting that they would close probably and sometime in Q3, there is a chance that Brazil and some of the other mark.
Whats could close as early as the end of May or at some point in Q2, but we'll continue to kind of work through the timing there there will be some.
Some assets, particularly some select rooftops that will close in Europe and.
In Q3 and not in Q2, so we will have multiple closings across Q2 and across Q3.
So that's kind of the way that shakes out and again, we remain very confident that this financing plan and our patients and kind of putting it together and managing through the details is really going to pay off for our shareholders and we are in very good shape to begin to execute on this and the month of May as we prepare to close the first tranches of the of the <unk> transaction.
And then John with regards to your second question on where we are with fiber is one of our platform extension initiatives first of all kind of where we are I mean, we had a six country fiber footprint, Mexico, Brazil, Argentina, Colombia, and India and we cover over 30000 route kilometers we ask.
And we pass the $1 million and a quarter homes.
And those markets and and the networks themselves are a mix of active long haul metro <unk>, and Mexico and Brazil.
And a concentration of fiber to the X passive optical networks, and that's a Colombia, and Brazil and Argentina.
And we've spent.
Over $1 billion of Capex over the past four years and those six markets.
700 million for acquisitions, and 300 million for development and Readouts and development.
Capex. So we've been monitoring it very very closely from a revenue perspective, I think we generated about $100 million and 2020.
And our ROIC for those particular investments collectively and kind of 555% kind of range interesting. The SA assets return on invested capital was probably double that.
So what we're thinking about from a true strategically again, it's we're looking at this from an initiative perspective.
And our platform initiative perspective.
Some of the underlying elements of it and foundations of it again go back to how we're looking at overall tower model multi service multi tenant and a long term anchor contracts escalators exclusive real estate rights of way for us to really be able to to create a competitive advantage and.
And really complement and the kind of the tower returns that we've been experiencing for the last.
10 years or so so our strategy really has some way to kind of two pronged I would say the first is is to pivot and transform our current fiber businesses, and Mexico, and Brazil to wholesale long term contracts, we will be looking to do this through long term contracts with tier one carriers also could involve some strategic inorganic transactions.
And we were just talking about before.
And the focus is clearly, creating a competitive long term strategic assets in those markets.
And then the second strategy really entails kind of reaching certain economics, and these deployments, particularly in SA and Brazil and.
And our focus on future investments and some of our emerging neutral host open access networks. So.
We'll continue to be opportunistic.
And we're obviously it makes sense to be monitoring it very closely.
But we do see that we will see a kind of a shift to open passive optical and multi tenant access networks over time, we think that's a great way to be able to improve the return on invested capital.
And our retail focus is currently right now on Latin America, and where most of the assets <unk> and.
And leveraging our existing <unk> relationships. So we think we can create that model and Latam and N and be able to scale it globally.
So I mean, that's kind of where we are and it's still a work and work in progress, but I think we're we've learned a lot and I think we're making great progress on the strategy.
Thank you.
Your next.
Comes from the line of Matt nickname from Deutsche Bank. Please go ahead.
Hey, guys. Thank you for taking the questions just two if I could one on the services side. If you can give us any updates in terms of how we should think about the cadence of.
Revenues and services margin. The next couple of quarters, just and then I'll, let you kind of get a better sense of.
The breadth of the strength and the prior remarks, Steve mentioned, it's pretty diverse in terms of contribution. So if you can give us any color there and then secondly on and on the SG&A front and India. It looks like Youre moving past some of the elevated bad debt and hit.
A year ago.
So just trying to get a better and get a better sense of how we should think about that in terms of weather.
And whether there's any incremental bad debt and you anticipate and that region or whether you've moved past that.
Thanks.
Great. Thank you Luca.
And I'd get into debt.
Yeah. Thanks, Tom Thanks, Matt Hope you're doing well. Thanks for the question. So with regards to our services business as you saw and the comments earlier and and I think Tom alluded to we are seeing a significant uplift and our services revenue per year. So you saw us raise our full year outlook to about $175 million up from about 120 million and the Mark.
And as a broadly consistent year over year, So we're expecting that mid <unk> mid.
So just a touch above mid 50% margins that's similar to what we saw in 2020, that's what we're expecting and 2021 in terms of the.
The timing of the services revenue, where we are seeing an acceleration of what the applications and kind of activity and the market and we expect that to continue throughout the next couple of quarter, so more than 60% of the revenue of the $175 million is backend weighted so we would expect in Q3 and for both of those carry into <unk>.
North of $50 million per quarter in terms of in terms of revenue and that's kind of the way to think about services services. We're seeing really is kind of a broad based increase in and services. It goes across most all of our large customers certainly and it's focused on ACP engineering model.
And the analysis things like that those sorts of activities are generally kind of front end loaded that services work happens well before you see leasing activity and any kind of an up lift and leasing revenue. So it's a really good sign here in terms of the activity level. The services that we see kind of ramping up towards the end of this year and as we transition into 2022.
Certainly when you think about India and <unk>.
Bad debt.
Still a few places where.
We're we're watching customers around the globe, a couple and Africa, and a couple and India, certainly we're doing really well there is no significant incremental bad debt and our and our outlook and our accounts receivable and the way that the.
And a Q1 is broadly in line with the way that it that at the end of Q1 last year. So we haven't had a significant increase in accounts receivable. So we continue the collapsed and be pleased with the way that our customers are paying in India and in the select places in Africa that we're watching and we did end up unwinding a.
Bad debt reserve and India in Q1.
And just under $10 million or so so that's certainly a good sign but with that said, we continue to kind of watch India. There's a few things that.
That we're looking for relative to some of our customers are in terms of capital raise projects that there and certainly the amount of liabilities through the AGR and some of the activity between our customers and the government to try to negotiate those seats and we watch that quite closely but that's really the story on it on accounts.
And bad debt. So we've had a good quarter, we did well throughout 2020, and we don't have any significant incremental bad debt and our outlook for 2021.
That's great. Thank you for the color.
Youre welcome.
Your next question comes from the line of David Barden from Bank of America. Please go ahead.
Hey, guys. Thanks for taking the questions.
I guess.
Robert Tom the.
Obviously, the the thing thats going to propel the growth revenue.
Injectors domestically as the C band auction.
And.
And the pursuit of exploiting that opportunity among the carriers can you.
And the benefit of us generally across this global portfolio that you have can you kind of maybe pick off the next one two or three markets, where youre expecting this kind of opportunity to emerge with spectrum auctions forthcoming and then the second question is.
You know John Stankey, and AT&T kind of city was quote unquote skittish about.
Fly chain.
Marketplace.
Even in the United States could you talk about how you're thinking about.
The supply chain and chip.
Availability, specifically affecting your company's.
Customer's ability to deploy and and how you've kind of factored that into your thinking about about the guidance. Thank you.
Yes, no share David maybe I'll start off and Rod can chime in.
And with some additional commentary I mean, what we're seeing around the globe as I think both rod and I mentioned, even in our remarks.
And just an onslaught of new spectrum coming into the marketplace, where even and we're seeing and India. We're seeing clearly in Europe, we're seeing and Latin America.
And in a wide wide swaths of spectrum from.
And for <unk> to be effective you need a wider swath of spectrum, you can't be and it's the 10 Meg Youre looking at 20 to 40 to 60 60 megahertz of spectrum and so.
That's the first sign I think David that we see because as I mentioned and there's what you all know.
Spectrum is the lifeblood of being able to rollout any of these new technologies and per five G to be able to truly realize the full <unk> experience in terms of speeds and latency and <unk>.
<unk> significant amount of it and.
So I look at and and my comment before on Europe, what we've seen and and certain of those critical markets critical countries in Europe really stepping up to launching a lot of new spectrum and I think that's one of the reasons and we're really now start and do you see some some outsized growth and those particular markets something that we hadn't seen for several years and and.
And that was really that really drove us to.
And they're looking at some of the growth curves and that market for per us even lean into some of the assets that are there and so that's just kind of the first and first sign of it I think.
You look at markets like Africa, though I mean Africa.
Like Rod had mentioned and they're kind of and the 8% looking and a growing to the 9% even kind of ending out the year you look at markets like Nigeria, and things like that where we're talking kind of double digit growth rates I mean, that's yes.
And that's just because they're the wireline presence there just doesn't exist and wireless broadband and everything that our customers are investing and so you have slightly different reasons or for some of the the growth. Many of the markets are just getting into <unk>. So we are still on the front of that or G curve and.
Latin America, you look at Brazil growth you're.
And you look at the Mexico growth I mean, there are and the kind of seven 8% kind of growth range.
And so we're really excited about what we're seeing outside of the United States and whats really driving it clearly has more spectrum more wireless penetration.
Unfortunately, the pandemic has actually driven even more of a need for connectivity and and so we're seeing even more wireless.
Usage in those markets and particular again, because the the wireline markets.
And just so poor and non existent and so we would expect to see Europe kicking in which were five G Africa continued growth.
<unk> becomes more of a reality there.
Latin America, Similarly, <unk> enterprise and ultimately.
And even the ABN and India the growth there is strong.
And I could churn issues that we have to deal with and in that particular market and we were getting our arms around and making sure that we really are and nail those there, but it's not a growth issue.
<unk> got new spectrum, they've got for GE, you see the likes of Facebook and you see all of that and the big foreign investment and it's coming into the marketplace and so it's really an exciting market from a broadband wireless perspective.
So I mean that kind of gives it on and on a global scale and from a supply chain perspective, we don't see any impacts on our side from a supply chain perspective at this point I mean, our customers are the ones that are kind of frontline with issues that they may have from some of the Oems and things like that but at least from our perspective, we're not seeing.
And any impact.
From from that perspective.
Okay, great. Thanks, Tom I appreciate it yesterday.
Okay.
Your next question comes from the line of Tim Long from Barclays. Please go ahead.
Thank you.
I was hoping you could talk a little bit more.
You talked about edge compute.
A little bit and your prepared remarks could you just kind of update us on how you're thinking about kind of the business model for AMG and obviously this is a longer term trend anymore views on data center investments and how you think you might monetize debt and then I had a follow up.
Okay, No I mean, and let me maybe.
Just take a step back a little bit in terms of kind of what we're seeing from it and an evolution perspective, if you're if you will.
First of all this whole market is in fact, developing with regards to specific to the edge.
We are at the kind of the beginning and we're seeing certain certain.
Elements aligned if you will.
But we're really starting to and trying to participate and those but we really are at the beginning sides of it.
If you start to think about kind of and first of all the sea Ray and impact with the cloud impact is we just saw some recent.
Announcements and in the market relative to some cloud players aligning with some of the M and OS and we've seen Verizon doing that over the last year or so.
And what we're starting to see it.
If you think about kind of debt the <unk> low and mid band tower.
Market and and what it looks like it's a site level as well.
Moving to <unk> and low band mid band, what we're starting to see at the site. For example is a lot of mimo is going to be starting to be deployed lot of tenant or raise a lot of new fiber and that going up the poles themselves five to 10 times more fiber strands needed higher power.
And more heat and so theres a lot of elements that are going on and actually at the site itself, which is going to drive more and more equipment.
Improvements to the public radio interface.
On the on the front haul, which connects actually the tower to the baseband unit itself and so now what we're starting to see is we're seeing cloud ran and and O ran.
And from an O ran perspective, it's different types of equipment that our customers are able to put together to be able to load onto the site and at the kind of at the base level at the baseband unit, which is where the data center element comes in and we're starting to see a disaggregation of the baseband unit level until the day, you and into the <unk> levels and that's giving our.
<unk> has the ability and us to be able to look at where in fact, we might be able to expand and be able to enjoy some of this additional compute capability that's going to exist at the out at the edge as the <unk> experience becomes more prevalent throughout the country. So we.
Tinder U and expect to see this incremental convergence of this wireline and wireless networks.
Thank you.
Stresses the importance of that per Smile network architecture, and so as a result, we are actually very very excited about the opportunity to share and neutral host solution. We think it's going to be very efficient at it added to site level, and we actually flooring and going down the path of really two elements right. Two waves if you will.
And we've talked about the distributed compute.
Enterprise workloads continue to move onto the public cloud and so theres, a growing near term market segment that and use that.
And that kind of off Prem cloud computing is really a hybrid solution and so we were located on some and if you will of our sites.
And you'll see them Theyre shelters are theres tower, there's capability to be able to offer this kind of a capability to these kind of mid size.
Enterprise accounts.
And they're actually being quite successful and they're loading up very quickly.
And really they're not meaningful from a from an A&P perspective.
But they are absolutely meaningful from a and experience perspective, and learning exactly what our customers are going to be looking for.
The bigger opportunity for us is still at the mobile edge compute side and and so that will become we believe more of a reality and that <unk> world becomes more and more developed and so we have a number of M O us with.
With a number of different players focused on solutions to the M and OS as well as focused on solutions to the cloud service provider.
And so we're exploring those putting those in front of those particular accounts and looking at what the ultimate opportunity would be and the site is a perfect location.
For bringing able to and be able to expand our customer's edge compute capability not just within the United States, but on a global basis.
We can bring in.
500 kilowatts of power into particular site.
And with a number of shelters that exist and this site to be able to load up racks and servers, we think and give that cloud ramp.
Which will actually exist and that day use so that's why that disaggregation is so important between those two particular elements of the of the Rand.
We can.
Enjoy some significant opportunity upside here from from this whole initiative and so it is a and extension of our existing platform again, it's neutral host, but it really provide ultimately that cloud Ram, which we think is going to be needed to be able to enjoy that kind of latency that debt our enterprise accounts and.
And where youre going to be looking for okay. Thank.
Thank you I just wanted to follow up when you think about.
Africa, and particularly India, obviously, some aggressive terra build plans over the next few years, but could you just talk a little bit about kind of this year and potential.
COVID-19 related risks to those builds and any other any other risks to the business because of the pandemic. Thank you.
Yes, I mean, I think that the build itself our plan our outlook I think is and the six to 7000 sites.
And there could be some timing issues associated with the build the needed there and <unk>.
And that the sites are going to be built but particularly in a market like India, who are suffering so significantly right now there can be a timing issue in terms of having essential people out in the marketplace to be able to build.
Clearly.
Lives saved is more important than towers built.
So there could be some timing there issues, but ultimately over a.
Five year period, we are seeing the demand for that 40% to 50000 sites that rod laid out and and our forecast right. Now is for that six to 7000 sites and there could be some timing issue associated with particularly the sites in India and I'm not seeing the same implications and and Africa at this point and time.
And by the way our overall, 6% to 7000 and sites that outlook already includes some carving back of what we are expecting overall.
In the marketplace.
And relative to COVID-19 over overall as we've seen over the last year, our business is quite resilient.
People need connectivity.
I think that's been more obvious than ever over this past year, particularly and in many of our global markets and so our customers are doing everything possible that they can to be able to maintain and that.
And kind of connectivity, we're doing everything we possibly can to be able to support them to be able to ensure that kind of connectivity and so we're working our tails off with our customers to make sure that we can do that.
Okay. Thank you.
Your next question comes from the line of Budd Levi from UBS. Please go ahead.
Great. Thank you a couple of questions first on U S. As you think about your long term guidance can you.
Can you tell us what it assumes in terms of the mix of amendments versus new co location and the new site builds that program that you have what percentage of that would be in the U S and.
And the carriers deploy CDMA and you have any indication that they are leaning more towards new leases as well and then maybe just a follow up on the escalator Rod if you can tell us a little bit more why it stepped down and then when it would go back to 3%.
And also if the day shelf life you can come from that's a 3% escalator as well thank you.
I thought you said there were just a couple of questions.
[laughter] and stuff, we should take what's called.
Okay, Great that's great. Okay. Thanks for being here and thanks for the question I'll, let rod and kind of run with it.
Yeah. Thanks for the question back here, so I'll try to remember all of the different aspects here, but if I Miss anything and just remind me and maybe I'll start at the end and and work backwards a little bit so the escalator and the U S. You saw our escalators for Q1 was about two six per cent that really was driven by the impact of the.
Timing mechanics within the T mobile MLA, so as we signed a new MLA with T mobile.
The escalator shifted from one period to another and that that affected the.
The volume of escalator and Q1, but for the full year, we do expect the escalated it would be right and that 3% range, 3% or just above potentially in Q2, we do expect the escalator from the U S to be three 1%. So there is no structural change there is no permanent shift it really is just a timing issue and I'll also point out as a.
Little ahead of time, but in 2022, you may see some some lumpiness as well with the escalator given the time shift here, but again for 2022 for the full year, we anticipate the escalated it being right and the absolute per cent range, 3% or just above as usual so no nothing to be concern there we haven't.
Had any philosophy shifts and no kind of contractual change in terms of what the escalator is it remains at 3% and as it always has and the U S.
And then I think and your next question was relative to the long term guidance and maybe I'll just take a minute to remind the.
And folks on the call of what that is so we're looking at.
And over the next seven years, we put out guidance at least 4% organic tenant billings growth on average over that time period that includes the sprint churn, which will begin to roll off of our billing later this year and Q4 beginning in the beginning of October if you normalize for that we're looking at.
That long term organic growth rate and the U S and about 5%. The other thing that I would point out here and if you look at just the first couple of year 'twenty, one and 'twenty two on a.
On a spring impacted basis, where we'll see that churn again, beginning in Q4 of 2021.
The expected organic tenant billings, including that will be around 2%, but normalized that it would be around 5%. Once we get clear from that when you get out to 'twenty three and beyond so 23 assets of 27, even with the impacts of the sprint churn and we're predicting organic tenant billings growth north of 5% and on a normalized basis for that same time period north.
Of about 6%. So we are very excited and confident about the future and the U S. We are seeing and acceleration of growth new days, we're seeing that today, we expect that to continue and that really is fueling these.
These are very solid organic tenant billings predictions over a long period of time and again that seven years and just a couple of key components here and I'll remind you, 23% or two thirds of debt two thirds of this revenue that we need to hit these things are already contracted and our long term agreements and and some of these holistic deals so that.
So that's key that includes dish kind of being in here.
And the assumption.
Some modest activity, which potentially could be outperform depending on the pace and the level of their network build over that time period and some of the C band spectrum deployments for some carriers and some of the years. Maybe in addition here and outside of kind of the traditional holistic. So we're looking for that potentially as a as and ups.
And then in terms of the Colocation and Amendment mix. We're currently still at heavy amendment, 80% and 20% co location and that's the way it spend per a little while it may vary from carrier to carrier, but that's what it's been consistently and we expect that that'll be the case for a couple of years book going out longer term. It will vary we do expect that there could be a higher percentage.
A co locations and we've traditionally seen as the carriers deploy this higher band spectrum and they have a need to densify their network sales over time, So we're certainly planning for growth.
And for some of that as well, but it's probably too early to predict debt too much specificity in terms of what that will be.
In terms of the mix and the out years.
And was there another piece and your question Bob.
And.
Just a day Chevrolet it doesn't have a three person escalator.
Yes, the the dish MLA is Ah.
The dish and only has the 3% in there. So the escalator is consistent with everything else that we do and consistent with our philosophy here and that.
And the U S. And then in terms of timing of the revenue is obviously, maybe highlight for folks that we do expect revenue to begin in 2022 and.
It'll be modest and that year, and then it'll ramp up going forward and we'll see we'll be working with dish to help them roll out their network over an extended period of time.
Awesome. Thanks, so much.
Okay, great well. Thank you everybody for joining this morning that'll wrap it up I hope everyone is doing well and we will talk to you soon.
Yes.
Thanks, everyone ladies and.
Ladies and gentlemen that does conclude your conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.
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